Yann Magnan, head of European valuation practice at Duff & Phelps
How do you deal with enforcement of the reform of the audit market in the EU, at Duff & Phelps? As a valuation and corporate finance specialist, did the firm need to reconfigure its core business in Europe?
Not at all. EU is generally interested in improving financial stability, and new regulations naturally go this way. Hence a bigger focus on transparency, good governance and obviously preventing conflicts of interests. In that framework European regulators have now required auditors to rotate.
Duff & Phelps is not concerned by this reform, since our company focuses on advisory services and particularly on valuation services. We have never provided audit and will very unlikely ever go into that business. As a matter of fact, Duff & Phelps has historically been set up as a group that provides advisory services with limited risks of conflicts of interests, as we do not provide Audit services.
Duff & Phelps is not concerned by this reform, since our company focuses on advisory services and particularly on valuation services. We have never provided audit and will very unlikely ever go into that business. As a matter of fact, Duff & Phelps has historically been set up as a group that provides advisory services with limited risks of conflicts of interests, as we do not provide Audit services.
At the same time, the International Valuation Standard Council (IVSC) seems to make standards reinforcement its current hobbyhorse. Is that to say that valuation practice gets increasingly technical, even tricky?
Valuation has always been technical and tricky. But valuation only reflects the world’s complexity since it becomes more and more financial by nature. There are more financial issues and frequent financial crisis today. That generates uncertainty and our clients have to deal with it every day. Hence their need to call on experts with very robust, up-to-date experience and expertise in all the fields of valuation.
On that subject, advisors at Duff & Phelps permanently scrutinize the evolution of standards and they actively take part in reflections about it. As our company has become a privileged interlocutor over time, we generally play a significant part in valuation standards setting.
On that subject, advisors at Duff & Phelps permanently scrutinize the evolution of standards and they actively take part in reflections about it. As our company has become a privileged interlocutor over time, we generally play a significant part in valuation standards setting.
Does it mean that complexity becomes integral part of how people grow professionally today at Duff & Phelps? How does it affect your HR strategy?
We’re looking for individuals who have the technical skills and ability to deal with complexity. That’s our key strength indeed. Yet Duff & Phelps employees shall not just be the best technical experts. They shall also be excellent consultants and hence know how to deal with highly demanding clients.
It's a must for us as a firm to deliver our advices and be able to explain our conclusions in the most comprehensive manner. In the future, we plan to hire more and more talented people having these skills and expertise.
It's a must for us as a firm to deliver our advices and be able to explain our conclusions in the most comprehensive manner. In the future, we plan to hire more and more talented people having these skills and expertise.
Could you tell us more about how your valuation process and expertise differentiate Duff & Phelps from other niche players or non-specialized advisors like the Big Four?
I personally joined Duff & Phelps by considering the tailoring of the firm’s way of working, and its attachment to values of transparency and good governance. We provide valuation expertise as one of our primary services, while the Big Four provide audit as a primary service. As long as we don’t provide audit services, we are a company with limited conflict of interest or independence issues. And that’s a key differentiator in the eyes of our clients. Duff & Phelps can be seen as a niche player in the financial world, a sort of “next up” player. We develop smart solutions, which means that we design individualized, sophisticated and reactive tools on the basis of the understanding of our clients needs.
Once again, we’re not auditors. We are an alternative to some of non-audit services offered by the Big Four, without the conflict of interests that the Big Four may have with their Audit services, all the more since the new European regulations require auditors to rotate every 6 or 12 years. That creates uncertainty for users of Big Four services, and clients do not afford uncertainty. Finally, Duff & Phelps’ core business is best described by “powering sound decisions”, i.e. giving peace of mind to decision makers who come across engaging decisions on a daily basis.
Once again, we’re not auditors. We are an alternative to some of non-audit services offered by the Big Four, without the conflict of interests that the Big Four may have with their Audit services, all the more since the new European regulations require auditors to rotate every 6 or 12 years. That creates uncertainty for users of Big Four services, and clients do not afford uncertainty. Finally, Duff & Phelps’ core business is best described by “powering sound decisions”, i.e. giving peace of mind to decision makers who come across engaging decisions on a daily basis.
Duff & Phelps now claims ‘a valuation practice that spans every asset class. Could you be more specific about the multi-asset range you deal with?
Duff & Phelps is one of the largest valuation groups in the world. We assess value of almost every assets classes, from tangible assets up to the most complex intangible assets or financial instruments. To be more specific, we perform valuation - and related valuation advisory - of intellectual property like brands and names, technologies and software, but also complex financial instruments like CMBS and RMBS. The acquisition of American Appraisal in early 2015 has enabled us to extend further our specific know-how and geographical reach, particularly in the area of machinery equipment and real estate.
Across the globe, for each asset, each service, and each industry we now have highly specialized experts, thanks to whom we’re able to provide a sophisticated expertise on almost every specific issue. Generally speaking, we always mobilize ‘the’ perfect expert on each engagement, no matter where he’s based around the world. We are committed to deliver the best service to our clients.
Across the globe, for each asset, each service, and each industry we now have highly specialized experts, thanks to whom we’re able to provide a sophisticated expertise on almost every specific issue. Generally speaking, we always mobilize ‘the’ perfect expert on each engagement, no matter where he’s based around the world. We are committed to deliver the best service to our clients.
With nearly 4000 valuation advisory engagements in 2014 and clients such as blue chips listed companies, middle-market companies or even private equity firms, what are the major trends you identify in terms of valuation needs, nowadays?
Valuation within the framework of financial reporting (e.g. financial statements) is something that spreads in Europe and the US since more than 15 years. The big picture on this market also reveals a strong requirement of valuation for tax purposes. In the current environment, especially in the EU, governments scrutinize transactions that have tax impacts more and more closely, and our clients come to us to make sure that they have robust valuation analysis in that framework.
At last - and that especially concerns European companies - we notice growing requests, from C-Level executives, for independent valuation analysis on transactions. Executives and BoDs generally call more and more on a trusted third party in this kind of transactions under the form of opinions.
At last - and that especially concerns European companies - we notice growing requests, from C-Level executives, for independent valuation analysis on transactions. Executives and BoDs generally call more and more on a trusted third party in this kind of transactions under the form of opinions.
Since 2005, Duff & Phelps acquired several complementary businesses to expand its service offering. Today, we can consider Duff & Phelps a privileged interlocutor in the so-called ‘transaction continuum’?
That’s exactly what we are. Within the framework of transactions, Duff and Phelps provides valuation services before the transaction. We help our clients assess the value of their target, and we provide similar services after the transaction is closed. We value assets for financial reporting purposes. We also provide services related to transactions such as M&As, selling assets or restructuring a business or a group of assets that is underperforming. We are also able to assist in arbitrations, disputes and litigations.
So, what’s the next strategy step? What is the vision statement for the company?
We have a road map of continued growth ahead of us. The services we offer are perfectly lined up with current market’s expectations. The world will be more and more financial, and more and more complex. With that in mind, there will be a need for a robust and reputable global provider of financial advisory services, whose services favor transparency and good governance. And that’s what Duff & Phelps is about!
